Future CO2 Regs Cloud Japan's Potential to be Major LNG Bunker Hub: Report

Thursday April 26, 2018

Japan has the potential to become a major hub for liquefied natural gas (LNG) bunkering, a new report by the International Transport Forum at the OECD has concluded, but uncertainties over the alternative fuel's performance on CO2 could limit that potential.

Japan is currently the world's largest importer of LNG.

"Alongside the fuel's main use in electricity production, the country has developed marine bunkering facilities to provide LNG to ships. Japan is also a major trading nation and the volume of its maritime trade provides the basis for its LNG bunkering hub strategy," the report says.

Success for Japan's LNG bunkering ambition relies on four factors, the report suggests: Uptake of LNG as ship fuel; Availability of LNG bunkering facilities worldwide; Strategic location close to trade routes; and Recent and future emissions regulations.

In terms of location, the report notes The Port of Keihin is located at one end of the North Pacific trade route as a first port for loading and unloading.

"This gives it a locational advantage to become a major LNG bunkering hub, and Keihin already has existing LNG bunkering infrastructure," the report says.

But it is the matter of future emissions regulations that will likely be of most concern, not only to Japan, but all those considering - or touting - LNG bunkers.

"Emissions regulations will soon target maritime CO2 and no longer mostly NOx and SOx. LNG can cut CO2 by around 20% but is not the ideal solution to reduce greenhouse gas from ships. For instance, it releases methane from unburnt gas in engine exhaust ("methane slip"), and handling LNG at each stage of the supply chain leads to fugitive emissions," the report says.

Still, the report recommends a number of steps the nation can take, including a plan to ensure LNG infrastructure is introduced in a flexible manner that can be scaled up if and when demand grows, and ensuing that new storage facilities and gas infrastructure should be able to accommodate a range of gases, such as bio-methane.